How IT Services Companies can Thrive in the Age of Cloud

After a disappointing 2009, a year in which global tech spending fell by 4.2 percent, IT Services companies are experiencing renewed demand for their services as global tech spending rebounds this year and is set to rise by 3.8 percent, and touch $1.5 trillion according to market researcher IDC (for more, read this Businessweek article Tech Spending Is Back. And It May Even Last.)

IT is undergoing its biggest changes since the advent of client/server computing in the 1980s.  These changes are being driven by many factors, chief amongst them the emergence of a different model of computing – cloud computing.  We are entering the Age of the Cloud. 

But before settling down to Business As Usual model of pre-recession days, IT services companies should look at changing tech landscape and “Clouds” on tech horizon – Cloud Computing that is! In the words of Irving Wladawsky-Berger, “IT is undergoing its biggest changes since the advent of client/server computing in the 1980s.  These changes are being driven by many factors, chief amongst them the emergence of a different model of computingcloud computing.  We are entering the Age of the Cloud.” (for more, read his excellent blog post titled IT in the Age of the Cloud)

In his post, Irving Wladawsky-Berger has quoted findings of study on The Future of Corporate IT by The Corporate Executive Board. After interviewing and surveying hundreds of IT and business leaders, this study concluded that “The IT function of 2015 will bear little resemblance to its current state. Many activities will devolve to business units, be consolidated with other central functions such as HR and Finance, or be externally sourced. Fewer than 25% of employees currently within IT will remain, while CIOs face the choice of expanding to lead a business shared service group, or seeing their position shrink to managing technology delivery.

The Corporate Executive Board study has further identified five emerging shifts in IT value and role. These are:

  • Shift 1: Information Over Process
  • Shift 2: IT Embedded in Business Services
  • Shift 3: Externalized Service Delivery
  • Shift 4: Greater Business Partner Responsibility
  • Shift 5: Diminished Standalone IT Role

IT Services companies need to prepare for these emerging shifts and incredible opportunity they present by expanding their “Cloud” service offerings.

The IT function of 2015 will bear little resemblance to its current state. Many activities will devolve to business units, be consolidated with other central functions such as HR and Finance, or be externally sourced. Fewer than 25% of employees currently within IT will remain 

Unlike product companies, one of the issues many IT service providers (and especially those that operate in the lower end of price spectrum) face is that their revenue is directly linked to “billable” headcount. And to grow their revenue beyond certain point, these companies need to have a “product” or “license” based revenue model rather than “headcount” based model. Cloud computing offers an excellent opportunity for IT services companies to develop service offerings that can be offered to client under Software as a Service (SaaS) model.

Talking specifically about CRM and Social CRM, IT Services companies should extend their CRM and BPO service offering to cloud based services in following areas:

  • Development of Engagement Platforms and Communities
  • Integration of “On-premise” CRM apps with “Cloud based” Social CRM apps for 360 degree “view of customer”
  • Cloud based Social Media Monitoring, Reporting and Analytics
  • Cloud based Social Media and Network Analytics solution

Affiliated Computer Services, a leading service provider recently launched “Community as a Strategy” – a suite of social CRM services that captures customer insights from social media sites to improve service and responsiveness of organizations. Other IT and BPO Service Providers should take notice of this development and follow ACS’ lead in this direction.

What do you think? How IT and BPO Service Providers can can Thrive in the Age of Cloud? Please do share your thoughts and opinion:

  • About Dr. Harish Kotadia


    That's me with photo gear,  taking snaps of Texas wild flowers. #texas

  • Dr. Harish Kotadia

  • Dr. Harish Kotadia is an industry recognized thought leader on Big Data and Analytics with more than fifteen years' experience as a hands-on Big Data, Analytics and BI Program/Project Manager implementing Enterprise Solutions for Fortune 500 clients in the US.

    He also has five years' work experience as a Research Executive in Marketing Research and Consulting industry working for leading MR organizations such as Gallup.

    Dr. Harish Kotadia's educational qualification includes Ph.D. in Marketing Management. Subject of his doctoral thesis was Customer Satisfaction and it involved building a statistical model for predicting satisfaction of clients with services of their ad agency.

    His educational qualification also includes M.B.A. and B.B.A. with specialization in Marketing Management and Diploma in Computer Applications.

    Dr. Harish Kotadia currently works as Principal Data Scientist and Client Partner, Big Data and Analytics at a Global Consulting Company. Views and opinion expressed in this blog are his own.



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